Oberthur Card Systems' 2004 Full Year Results Show Strong Growth and Promising Future.

LOS ANGELES -- EBIT: EUR 40.2 M (+11.2%); Net Result: EUR 25.1 M (+32.4%); Net Debt / Equity Ratio: 0.21

Oberthur Card Systems' profitability once again increased significantly in H2 2004 and over the full calendar year. At the same time, the company continued improving its net debt/equity ratio, which was reduced to 0.21 as of December 31st, 2004 (vs. 0.38 as of December 31st, 2003).

Fiscal year 2004 was also characterized by strategic investments paving the path for the company's future. Oberthur Card Systems increased its geographical coverage to better serve its customers in regions promised to strong growth such as South East Asia (Thailand, Taiwan, India, China -- where it increased the capacity of its Shenzhen factory), South America (new plant in Brazil), in Europe (new personalization center in Hungary), in the Middle East (Turkey) and in Russia (partnership).

During this period, Oberthur Card Systems pursued its efforts in innovation to maintain its technological leadership and match its offering with future customer demands. For instance, the company launched GIGAntIC(TM), the very first high capacity memory USIM card (128MB) in January 2005.

M EUR         Full Year    H1     H2   Full Year Variation   2004/2003
                 2004     2004   2004    2003      M EUR         %
------------- ---------  -----  -----  --------- ---------  ----------
Sales             450.8  210.8  240.0     430.1      +20.7       +4.8%
EBITDA(1)          59.4   24.2   35.2      56.2       +3.2       +5.6%
EBIT(2)            40.2   15.6   24.6      36.1       +4.1      +11.2%
Net Result         25.1    7.1   18.0      18.9       +6.2      +32.4%
Net debt /
 Equity ratio      0.21   0.24             0.38

Acceleration of activity in the second half of the year

Sales for the full year 2004 reached EUR 450.8 M, a 7% year-on-year increase before parity impact and 4.8% at current rate. Publication of the financial statements in US dollars would have revealed a 15.2% increase in sales.

During this period, Oberthur Card Systems delivered 148.3 million microprocessor cards, a 16% increase compared with last year, while the average selling price declined by 5.5% at constant exchange rates.

Second half sales of EUR 240 M increased sequentially by 13.9%, due to a stronger seasonality and a strong improvement of the product mix in the mobile communications sector.

The dynamism in all of the company's activity segments is particularly significant in Q4 compared with Q3: +50.7% in mobile communications, +37.8% in Identity and +26.7% in payment services & solutions.

With regards to its market segments, here are the highlights of fiscal year 2004:

Payment:

--Explosion of microprocessor payment cards, especially in the UK, which triggered an increase of +39.6% in shipments and +34.6% in sales.

--Continued and sustained increase of banking personalization services in Europe resulting in a +18.2% growth.

GSM:

--Significant improvement of the GSM product mix with +77% of 4Q sales made of high-end products (64K and higher)

Identity:

--First significant markets and prestigious references in Identity such as Belgium e-passport, Australian Health card, Singapore e-passport and selection for Thai e-passports.

Profitability Control

With an EBIT of EUR 40.2 M in 2004 vs. EUR 36.1 M in 2003, the Group has once again improved its profitability -- 8.9% of 2004 sales. This result is even more remarkable as it takes place in a context of increased competition and at a time when the company has increased its foreign investments with returns in terms of sales expected in 2005 and beyond.

The improvement in profitability is mainly due to a steady high-level gross margin (+60%). This is the result of the Group's strategy in high-end microprocessor products and the quality of the services and solutions provided to our customers. The good control of personnel costs: 28.7% of sales compared with 29.7 last year and of general expenses -- in spite of expenses triggered by the geographic expansion -- were also contributing factors.

Interest paid was also significantly reduced: EUR 4.0 M (vs. EUR 5.6 M in 2003) because of the important debt reduction over the year. Actually, with a cash flow from operating activities of EUR 40 M, the company was able to both finance its growth investments of over EUR 20 M (an increase of +33% over 2003) and reduce its net debt by more than EUR 20 M. The company continued to benefit from a favorable taxation rate as the outlook on future results has allowed the recording of a differed tax asset, mainly in France.

As of December 31st, 2004, the company had an equity of more than EUR 198 M with a net debt equity ratio of 0.21, the best it has ever had.

Promising future for Oberthur Card Systems' overall activity

Oberthur Card Systems confirms its position as a key player in all its markets.

The quality of its products and its stronger local presence allow the company to anticipate as early as 2005, a strong and powerful increase in the very competitive mobile sector, especially in the US.

In the banking segment, the EMV deployment should accelerate over the next two years in several countries where Oberthur Card Systems already has a privileged situation such as Italy, Spain, Turkey, Thailand, China, Russia, Brazil and Mexico. During that time, the Group is confident in its capacity to acquire significant market share both in microprocessor cards and services.

Though still emerging, Identity and Security projects offer huge growth potential and have started to generate significant orders.

To conclude, Oberthur Card Systems believes that its positioning should enable it to grow and generate profits between 2005 and 2007. As a token of trust in its strategy, personnel and products, it will propose the payout of a dividend of EUR 0.14 per share during the Shareholders' meeting scheduled on June 7th, 2005.

(1) EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization

(2) EBIT: Earnings Before Interest and Tax

About Oberthur Card Systems

With sales of 450.8 million Euros in 2004, Oberthur Card Systems is one of the world's leading providers of card-based solutions, software and applications including SIM and multi-application smart cards as well as services ranging from consulting to personalization.

Innovative products, security expertise and high quality services ensure Oberthur Card Systems' strong positioning in its main target markets.

--Payment & Services: 57% of 2004 revenues. World leader and number one supplier of Visa and MasterCard payment cards

--Mobile Communications: 30% of 2004 revenues, with open and interoperable solutions based on Java(TM) technology.

--Identity: strong positions in ID projects throughout the world

--Multimedia: leading position in the Pay-TV market with an end-to-end expertise in the value chain, from software development to manufacturing and personalization

--Transit: focus in the high-end segment with a microprocessor-based offer

Close to its customers, the company benefits from an industrial and commercial presence across all five continents. Listed on the B section of Euronext Stock Exchange (ISIN: FR0000124133) since July 2000, Oberthur Card Systems is a subsidiary of the Francois-Charles Oberthur Group.

For more information, visit www.oberthurusa.com and www.oberthurcs.com.

Exhibit


Profit and loss account and other key indicators

M EUR                   Full Year   H1     H2   Full Year   Variation
                          2004     2004   2004     2003      FY 2004/
                                                             FY 2003
----------------------- --------- ------ ------ ---------   ----------
Sales                      450.8  210.8  240.0      430.1        20.7
Gross Margin               270.8  126.6  144.2      259.8        11.0
   Gross Margin % sales    60.1 % 60.1 % 60.1 %     60.4 %
Compensation and
 Benefits                 (128.9) (63.2) (65.7)    (127.9)       (1.0)
Other external charges     (79.3) (37.4) (42.0)     (72.3)       (7.0)
Taxes and duties            (5.4)  (2.8)  (2.6)      (5.7)        0.3
Other                        2.2    0.9    1.3        2.3        (0.1)
EBITDA                      59.4   24.2   35.2       56.2         3.2
Depreciation and
 provisions                (19.2)  (8.6) (10.6)     (20.1)       (0.9)
EBIT                        40.2   15.6   24.6       36.1         4.1
                % sales      8.9%   7.4%  10.3%       8.4%
Financial results           (3.2)  (1.3)  (1.9)      (2.9)       (0.3)
Earnings after
 financial results          37.0   14.3   22.7       33.2         3.8
Income tax                  (4.8)  (4.1)  (0.7)      (5.3)        0.5
Extraordinary income
 and losses                 (0.6)     0   (0.6)      (2.2)        1.6
Goodwill amortization       (6.4)  (3.2)  (3.2)      (6.3)       (0.1)
Minority interests          (0.1)   0.2   (0.3)      (0.5)        0.4
Net Income                  25.1    7.1   18.0       18.9         6.2
Earnings per share in
 EUR                        0.35   0.10   0.25       0.26        0.09
Net income per share
 before goodwill            0.43                     0.34
Gearing                     0.21   0.24              0.38
Headcount end of period     2943   2974   2943       2885          58


Breakdown of sales in M EUR by card type

M EUR                      Full year  Full year        Variation
                              2004       2003         2004 / 2003
-----------------------    ---------  ---------   --------------------
                                                   Actual    Constant
                                                  exchange   exchange
                                                   rates      rates
-----------------------    ---------  ---------   ---------  ---------
Microprocessor cards          288.4      263.1       +9.6%      +9.7%
 Payment                      117.1       86.3      +35.7%     +34.6%
 Mobile Communications        133.5      142.5       -6.4%      -6.2%
 Identity & Security           37.8       34.3      +10.1%     +13.9%
Other Cards                    67.2       74.0       -9.2%      -5.0%
Services & Solutions           95.2       93.0       +2.4%      +7.2%
Total                         450.8      430.1       +4.8%      +7.0%